Peter Hargreaves has urged investors to hold their nerve during the coronavirus panic, despite avoiding a £94m hit from the “serendipitous” sale of £550m of his shares in Hargreaves Lansdown before markets tanked.
In an email update to clients of Blue Whale Capital, the investment boutique he co-founded, Hargreaves (pictured) said while “the worry in markets” from the coronavirus contagion has been “completely understandable” he was concerned by the number of investors who were trying to time the market which “is invariably pure luck”.
“I often witnessed the crowing of many chance sellers smugly boasting of their good fortune and even their perspicacity,” Hargreaves said. “I have however rarely witnessed favourable timely reinvestment. In most cases they would have been better to weather the storm.”
While markets have stabilised from global market’s catastrophic performance last week in which they lost some $5trn Hargreaves said he doubts the “considerable volatility is over”.
“Some investors have sold despite the consoling words from numerous pundits,” he said. “Have we seen the bottom? I doubt it.”
Hargreaves avoided £93.5m hit from HL sale
But Hargreaves’ decision to ditch 34,375,000 of his shares in the D2C firm he co-founded last month helped him avoid taking an additional £93.5m hit as stock markets dived toward the end of the month.
Since Hargreaves sold his stake on 6 February shares in the platform group have sunk 16%, resulting in a £314.1m hit for the D2C firm’s billionaire co-founder.
But this could have been a much bigger hit of £407.6m had he not sold down his stake weeks prior.
Timing ‘purely serendipitous’
Hargreaves said the timing of the sale was “purely serendipitous” and said he has not made further sales in the weeks since.
He added that “surprisingly” there is “only a small difference” between the discounted price of £16 he sold his shares at versus the D2C firm’s current share price of £14.37.
Following his sale Hargreaves said he finds himself in the unenviable position of trying to put his cash to use and time his re-entry to the market.
“Will I miss the rise? Will I buy too soon? Is today’s bounce the start of recovery or a false dawn? I shall probably procrastinate, but I don’t expect sympathy.”
